ETF — Early Termination Fee
Texas Electricity Glossary
An Early Termination Fee (ETF) is a penalty charged when you cancel a fixed-rate Texas electricity plan before the contract end date. ETFs exist because your REP purchased your electricity supply on the wholesale market months in advance — cancelling early breaks that commitment. In Texas, PUCT caps residential ETFs at $20 per month remaining in the contract. Every plan's ETF must be disclosed on the Electricity Facts Label (EFL).
How Texas ETFs Are Calculated
Most Texas fixed-rate plans use a per-month remaining structure. If your 12-month contract has 6 months left and the ETF is $20/month, you owe $120 to cancel. Some plans use a flat ETF (e.g., $150 regardless of timing) — for these, read the EFL carefully. The residential cap of $20/month does not apply to commercial electricity contracts.
ETF break-even calculation
ETF ÷ Monthly savings on new plan = Break-even months
Example: $160 ETF ÷ $25/month savings = 6.4 months to break even.
If you have 8 months left in your current contract, breaking out early breaks even by month 7 of the new plan. Worth it.
When ETFs Are Waived in Texas
PUCT rules require your REP to waive the ETF in specific situations:
- Your REP increases the rate during the contract term (with proper notice — you have the right to exit)
- You are a victim of domestic violence (documentation required)
- You move outside your REP's service territory
- Your REP fails to meet service quality standards
Additionally, many plans contractually waive the ETF if you move — check your specific terms.
Finding Plans with Low or No ETFs
Short-term fixed plans (3–6 months) and variable-rate plans have no ETF. If flexibility is important, compare month-to-month options and weigh the rate premium against the cost of being locked in. TexasPowerCost.com shows ETF amounts alongside plan prices so you can factor it into your total cost of switching.
Related Terms
- Fixed-Rate Plan — the plan type that carries an ETF
- Variable-Rate Plan — no ETF; switch at any time
- Prepaid Plan — no ETF; no contract
- EFL — discloses the exact ETF for every plan
- PUCT — the regulator that caps residential ETFs at $20/month remaining
Frequently Asked Questions
How much is an early termination fee for electricity in Texas?
PUCT caps residential ETFs at $20 per month remaining in the contract. For example, if you have 8 months left on a 12-month contract and cancel, the maximum ETF is $160. Some plans have flat-fee ETFs (e.g., $150 regardless of timing) instead of per-month structures — always check the EFL. Business plans are not subject to the $20/month residential cap.
When can I switch electricity providers without paying an ETF?
You can switch without an ETF when your contract expires. In Texas, your REP must notify you 30–60 days before contract expiration that your term is ending. You then have a window to renew, switch, or move to a month-to-month rate without penalty. If you move to a new address, some plans waive the ETF — check your contract terms.
Is it worth paying an ETF to switch to a cheaper electricity plan?
Sometimes yes. If you can save $30/month by switching and your ETF is $120 (6 months remaining × $20), you break even in 4 months on the new plan. Calculate: ETF ÷ monthly savings = break-even months. If you have less than that many months left anyway, it may be worth waiting. Use TexasPowerCost.com to compare current plans at your usage level to determine potential savings.